5 Things You Should Rent, 5 To Never Rent
Many people succumb to the appeal of renting which allows consumers to make smaller monthly payments instead of paying a large lump sum. Sometimes renting makes sense but other times it's a money trap. To help you decide when to rent, MSN Money has put together a list of things you should and should never rent. The list, inside...
You should rent:
5. Pickup trucks
Unless you frequently need to haul stuff, you might be better off renting a pickup for the occasional load and driving a car with good gas mileage on a daily basis.
4. Vacation homes
Owning 2 homes is often more than twice the cost of owning one. People often underestimate the cost of insuring and maintaining a mostly unused home.
3. Anything you use once a year or less
Floor buffers, power washers and expensive power tools can be cost effective if renting. Another idea is to go in 50/50 with a neighbor on infrequently used equipment.
2. DVDs
Unless you repeatedly watch the same movies over and over, it makes more sense to rent. If you haven't heard about Netflix by now, it's time to check them out.
1. The next car you plan to buy
If the rental agency offers the particular car, it is a good way to get a feel for a potential new car without the pressure of the salesman.
You should never rent:
5. Wheel Rims
Being a player can be expensive especially since the least expensive rims cost $1000 and up. Rent-A-Center will rent you VCT Grissini wheels for $62 dollars a week for 12 months. However, at this rate you end up paying twice as much as they are actually worth.
4. Furniture
Renting furniture can quickly put you in the red. You can easily spend 100% more than the furniture is actually worth if you rent-to-own. You are much better off by checking out Craig's List or a thrift store.
3. Computers
Unless you are running a small business, renting computers is usually a bad idea. For example Rent-A-Center offers a Dell system for $39.99 a week for 62 weeks totaling $2,479 while the cash price is about $1,100.
2. Televisions
At Rent-A-Center, a 50 inch Toshiba rents for $34.99 a week for 116 weeks totaling $4,000 while the cash price is only $1,200
1. Your Paycheck
Payday lenders loan you cash for a fee. For example, you may be charged $45 to cash a $300 dollar check. This works out to an effective APR of over 400%. If you fail to pay back the loan, even more fees are added leaving you buried.
As a rule of thumb, rent-to-own stores rarely ever make financial sense. These stores profit on people who don't have enough money at the moment but feel they cannot live without certain luxury items. Even carrying a credit card balance for a few months on purchased items is ideal compared to rent-to-own. However, as we see in the list, sometimes renting does make sense, but you can rest assured you will never see such items in a rent-to-own store.
5 things you should never rent [MSN Money]
(Photo: Getty)
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Comments:
Hmm, I remember seeing this article yesterday and thought I found it here. Hmm, guess not.
I agree with the pickup truck angle. How many men do you see on the road with their pickup because they think it earns them respect. I mean, if you want it and are willing to pay for it, well no complaining.
DVDs I buy. I've been toying with Netflix for those shows I may only watch once but I'm really an anime fan and when I first checked out NF years ago they just didn't have all the shows. Granted, I stopped buying DVDs when my backlog of unwatched hit triple digits.
1. The next car you plan to buy
If the rental agency offers the particular car, it is a good way to get a feel for a potential new car without the pressure of the salesman.
Only problem is that rental fleets are typically inversely related to cars that people actually want. There are a handful of exceptions, but by and large they suck, and you might end up attributing something to the car that is really a result of weak maintenance and heavy abuse.
Anyone stupid enough to even buy rims deserves to be ripped off.
Another thing I learned never to rent: water coolers. If you like those coolers that hold 5 gallon bottles of water, the water service companies will rent them to you for a couple of bucks a month, but a brand new one is only about $100 and they last forever.
I'm surprised they didn't include Storage in the "never rent" category. It is rarely cost efficient to pay to store anything. When I helped my brother get his financial life in order, the first thing I did was make him throw evewrything in storage out. He whined and moaned, and now admits that he doesn't miss anything. Plus, chances are that if you can't afford to own the spce to store something, whatecer you are storing isn't worth storing anyway (you shoudl see the couch my breother had in storae...he could have bought three of them for the cost of storing it a year).
I disagree with the pickup. I don't have a "hauling" job but I think, at least until gas gets to be >5.00 the convenience is well worth it. Sometimes a trip to COSTCO turns into more than a few things and not having to worry about how your're going to get your new pallet of rice cakes home is nice. I get 25 mph on the highway (about 95% of my driving) in my Ram 1500 (HEMI) so the gas mileage isn't too hateful. Stuff like tires and routine (but not often) maintenance is definitely pricier though. Plus we have my wife's smaller car for the weekend/around town stuff.
@Ash78: The would explain the Chevy Cobalt I rented in Austin last month. The whole time, I thought, "What is the reason for this car to exist? There is none."
Yes I read the original article someplace yesterday too, thought it was here as well.
Anyways, it also talked about homes, your primary residence, and of course there are times when it makes absolutely perfect since to rent a house, even in the long run.
I have owned homes in the past but I rent now, one of my favorite calculators to figure out the best option is [www.dinkytown.net]
Take it for what it's worth, it makes a lot of assumptions but it gives you a pretty good idea about your particular situation. Mine right now, best case owning will pay for itself in 17.1 years, average case it never pays for itself.
It is a lot cheaper right now to rent the house then to rent the money to buy the house and rent the land from the state, in my neighborhood at least.
I agree with the truck unless you have a small business. hard to beat 100% depreciation in the first year. That's lots of money back in April.
@AndyRogers: At 25mph, I bet you're saving a lot of gas. But is that really as fast as your pickup can go? ;)
so the morale of the story is don't go to rent-a-center
You can rent rims?
@speedwell: Definitely not, but in the DC area cruising the beltway at 60 miles per hour is about as fast as you can/want to go. And right now, I'm all about the fuel economy features of the HEMI vs. the housepower!
@battra92: I'd have to disgree with never buy DVDs. They're a social thing for me. "Hey, have you ever seen Fight Club?" "No..." "OMG you have to see it." works out better in plans with friends than "Hey, haev you ever seen Fight Club?" "No..." "OMG you have to... erm, add it to your Netflix queue... and, like, watch it alone because I won't know when you get it."
I pay $35/mo for a storage unit because I live in a apartment, and have no where else to put seasonal items. My wife and I are the only ones occupying a 2 bedroom apt, and we've already ran out of space.
@Applekid: It works the exact opposite for me. Since I'm married, I'm far more likely to hear you tell me about a good movie and put it in my queue for me and her to watch, than to go over to anyone's house to watch it.
You must buy a huge amount of stuff from Costco or always take your kids. My GF and I stock up from their once a month or two and have no problem fitting everything in her chevy malibu maxx (the hatchback version). We could buy enough for four if we had too. So it can be done with a much smaller car, you will just have to leave the kids home, (we fold our backseats down)but that will also make your grocery bill smaller ;).
@snoop-blog: My wife and I went from a 3bd/2ba house with a 2 car-garage and 1 child into a 2bd/2ba apt with a tiny patio while we were having our second kid.
We refused to pay to store "stuff" so we had two big garage sales before we moved and craigslisted anything else that didn't fit once we moved.
That was two years ago, I don't even remember what we sold apart from some big pieces of furniture and I definitely haven't missed any of it.
@jscott73: Good assessment to look at. There is a huge amount of geographical diversity in the buy vs rent decision. I've talked to acquaintances in California who tell me it would cost them about 3x as much to mortgage a home similar to what they're renting. Meanwhile here in (relatively) stabile Alabama, you can still get more for your money in a purchase vs. a rental situation (even including allowance for maintenance and repair, it's about break-even).
I think a lot of it has to do with whether the landlords have deep pockets--obviously someone who buys a rental property outright can rent it for as little as they'd like, while many small landlords have to cover a note payment and have a pretty thin margin.
yeah, maybe there are some benefits (for some) to storage, but usually i see it as a sign of too much stuff...i too went from a 2400 sq ft house to a 1000 sq foot house, and got rid of a ton of stuff, and still take care to purge regularly and buy less. im not judging -- just think storage fees are an easy way to cut out costs, and seem to me to be money spent that can be avoided
As someone who has been fighting "the bulge" of just having stuff, let me tell you, you don't need half the stuff you have if you cant fit it into a two bedroom apt when sharing the first bedroom. Hell get rid of the seasonal stuff. Do you really need to decorate for Halloween? and on top of that pay storage for decorations? Couldn't you just go to the dollar store around Halloween and buy some cheep stuff if you are really big about decorating?
I have actually found it's a much better deal to rent women once or twice a week than to actually own one. They don't nag, they don't tell me to turn down the TV, and they will always put out. Plus you can rent a variety of shapes, colors, and levels of freakiness. When you own one, there's no variety.
My stereotype of the week: If you're renting rims, you're not reading consumerist. Probably because you cant read.
@Ash78: Agreed, I know what you are talking about. I live in California, about a mile from the beach in San Diego, and it would be at least 3x my rent to buy something now.
I would be fine buying a house someplace cheaper buy my daughter starts school this year and my wife insists we stay in our current school distict since, according to her, it is the best around.
Well in California you pay for education one way or another, either by buying/renting in an expensive area or paying for private eduacation in a cheaper area.
Out of all the 'things' in the world that they say not to rent, how the hell did RIMS get in there??
It seems a little out of place to me. Then again, this entire thing is a "Don't rent from Rent-A-Center" fest. Odds are that if you're renting your furniture or TV from rent-a-center it is HIGHLY unlikely that you're reading MSN Money.
@homerjay: In the south, there are shit tons of shops dedicated to rim rentals. It's a lot bigger in warmer areas as the roads are usually in much better condition for rims.
The "should rent" list is helpful, but the "never rent" list seems like just a wordy way of saying "rent-to-own is a scam".
@Applekid: My issue is I so rarely get to watch TV that DVDs are my sole TV entertainment 90% of the time. I'd ditch the cable I pay for but I'm outvoted.
Owning DVDs used to be all about having the most or the nice packaging especially on Anime DVDs with their limited edition covers and what not.
Certain DVDs I will always buy (MST3K for example) but I've cut way back on things I might want to see or I wait for uber discounts and get them for like $3 on eBay. Just as cheap as renting that way.
LOL...I can't believe you can even rent rimz!
If you own a vacation home and it's "mostly unused" you are probably an idiot.
By the way, Rent-A-Center and the like are really an unethical business. Honestly, I wouldn't mind seeing them out of business even if it meant via the legal system although I usually abhor government dealing with businesses.
It also says something about my hometown when we have three different Rent-To-Own businesses.
I mean really, just go to tag sales or go on Craig's List.
Why would anyone rent rims?
So no to renting rims, but grillz are still OK, right?
@captadam: @homerjay:
One good reason to rent rims is for the Chevy Cobalt you are renting...it just makes financial sense. Go to Enterprise, rent a Chevy Cobalt with those nasty steel rims, and then pull into the nearest Rent-a-Center and have them put on some nice chrome spinners. You have instantly transformed your $20/day POS rental into a car that will turn heads and get everyone to give you a "thumb's up" for a fraction of the cost of a more stylish vehicle.
That gives me an idea...maybe the rental car companies can offer chrome rims as an upgrade
Car rental: Thank you for renting with us Mr. Smith. Are you interested in our insurance program, fuel refilling option, GPS Upgrade, Satellite Radio Upgrade or the Chrome rims upgrade?
Mr. Smith: I' think I'll pass on everything except the rims
Car rental: OK, car rental $25/day, Wheel rental $70/day, Spinner wheel bearing usage surcharge $3.95/day, Wheel installation cost $9.95/wheel, Wheel removal cost $9.95/day, Wheel Damage waiver $12.95/day, custom tire wear and tear fee $0.05/mile, and because you are a valued sucker err CUSTOMER, we will upgrade you to the spinner wheels with LED Lights for no additional fee.
Mr. Smith: Thank you...This Cobalt will be much better than the Ferrari I could have rented for half the cost.
I've always had a tough time finding a rental place that has pickups available at all. Cobalts and Escorts, yes; the occasional minivan, sure; pickups? Nope. Maybe it's a regional thing.
I disagree with the truck too. Having a small pickup is a great 2nd vehicle, especially if you buy one used. Also, I have received a decent enough discount on car insurance with a truck, as a "utility" vehicle.
Plus, did you know that in the state of GA, you don't have to wear a seat belt if you are in a truck. Not useful to me, but it does thin the herd out a little :)
There is a rim rental place on my drive to work. Hilarious, esp. since many time they are put on cars that aren't even worth that amount.
As for the Rent A Center (or Aarons, or whatever else), it's a sham, but everyone, even the people going there, know it. They probably don't have a credit card, can't get financing, and don't know that they don't *need* that crap.
The truck, I disagree. It really depends on what you use it for. If it's a penis substitute, then yes, get rid of it. I own a truck and can't imagine going to a car again. My wife has a car, but we haul too much crap usually to always have the car. Also, I'm the guy that my friends call to help move. Moving = gas money.
Payday lenders loan you cash for a fee. For example, you may be charged $45 to cash a $300 dollar check. This works out to an effective APR of over 400%. If you fail to pay back the loan, even more fees are added leaving you buried.
FUD BS, pure and simple. Payday loans are NOT the same as check cashing. I live in the Dallas/Ft. Worth area, and there are huge billboards all over town, touting "check cashing for 1%". That's $3. There's no "loan" when you cash a friggin' check. I know that people with lots of money hate payday lenders, but there's no need to deliberately confuse the two services, except to try and scare people needlessly. I'm surprised that Consumerist didn't catch this egregious mistake in their normally rigourous editorial process. And I'm not being facetious - you guys normally do an outstanding job of sorting out the BS from the truth. But this statement is just flat wrong.
In the South - it is not uncommon to see the following things (in order of most common)
$500 car with $2000 rims
$40000 car with $2000 rims in front of a $5000 trailer
People driving $40000 BMWs and paying for food with food stamps.
Its sickening to those of us who have made the decision to work for a living.
@WhirlyBird: I don't think it was intended as FUD, I think that the article meant to say "you may be charged $45 to borrow $300". The context of the rest of the paragraph is about PDL, not check cashing.
I'm surprised that Consumerist didn't catch this egregious mistake in their normally rigourous editorial process.
I don't think Jay is an editor for MSN Money. They wrote the article, not Consumerist. Consumerist just brought it to our attention.
I like the idea of renting a car to evaluate before buying.
Damned shame one can't do that with your (potential) significant other.
@Illiterati: Try U-Haul for small pickups. For full size trucks, try construction rental like United Rental.
@Applekid:
I'd have to disgree with never buy DVDs. They're a social thing for me. "Hey, have you ever seen Fight Club?" "No..." "OMG you have to see it." works out better in plans with friends than "Hey, haev you ever seen Fight Club?" "No..." "OMG you have to... erm, add it to your Netflix queue... and, like, watch it alone because I won't know when you get it."
I'm with you. The value of owning a good movie is important to me - I like to have them available for instant watching, plus it's kind of a hobby to collect them.
Currently I'm buying only HD DVD or Blu-ray movies, and I'm slowly replacing some old DVDs with the High-Def versions whenever sales show up.
I sell my old stuff at SecondSpin.com to recoup a decent percentage of what I paid in the first place.
I read the original article yesterday - I believe the wheel rims are $62 per week. $62 a month for 12 months is a good deal if they cost $1000.